Overseas Allowances

The system of local overseas allowance has been implemented by successive Governments for many years, and is a tax-free allowance paid to service men and women to meet the necessary extra costs to them of serving abroad. The current round of LOA reviews has resulted so far in these allowances being reduced in some cases and increased in others.

Does my hon. Friend agree that service men in Europe are there not by choice but because they were posted, and that an average single service man returning home three times a year to keep contact with his family or girlfriends has to pay £58 to £100—[Interruption.]—in air fares or £28 to £48 in ferry fares? Is it not a disgrace to lower the morale of British service men in Europe—the same service men who made us proud to be British during the Falklands campaign?

My hon. Friend has related his supplementary question to service men in Europe, and I can assure him that the current round of LOA reviews has resulted in an increase in the allowance for service men in Cyprus, Italy, Sardinia and Portugal. If we have a system for compensating service men for differences in the cost of living between the United Kingdom and the country overseas in which they are serving, it is inevitable that the LOA will decrease as their cost of living reduces, while it may increase in other countries where the cost of living rises. I understand fully the implications for those in Germany and their disappointment, but the current review has been rigorously carried out, and on the same basis there as in other European countries where the allowance has been increased over the past 12 months.

Is it not a fact that a "squaddie" in Germany who has £6 less in his wage packet sees that as a wage cut £6? Is the Minister not aware that that is how "squaddies" see it and interpret it? A private soldier is suffering a greater percentage loss than a major-general. How can the Minister justify that? How can we maintain the morale of the Army when already many skilled men are leaving it for jobs in "civvy" street? The LOA decision has been disastrous for the British Army of the Rhine and its morale at every level.

The hon. Gentleman talks about a serious impact on morale, but I do not think that the Government and Conservative Members generally need any lectures from the Opposition Front Bench on that score when we recall the Labour Government's attitude to service pay. I remind the hon. Gentleman that the Labour Government let service pay lag by up to two years behind the recommendations of the Armed Forces Pay Review Body. I remind him also that the rate of premature voluntary retirement reached all-time record highs under the Labour Administration.